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Friday, February 03, 2017

Average hourly earnings spark a US dollar whipsaw despite strong jobs growth

The market is caught between a strong jobs headline and weak wage growth. The headline was at least partially priced in after ADP but the Fed wants to see wage growth before hiking and a rise of just 0.1% compared to 0.3% expected isn't going to cut it. In addition, the December avg hourly earnings number was revised to +0.2% from +0.4%.
The rise in the participation rate to 62.9% from 62.7% also led to a rise in the unemployment rate to 4.8% from 4.7% but to me that's not bad news at all.
Like I wrote before the report, the market was leaning long-USD and it was going to take something really special to keep it higher.
Whippy trading in the aftermath but USD generally around 25 pips lower.

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